Correlation Between American Mutual and New Perspective
Can any of the company-specific risk be diversified away by investing in both American Mutual and New Perspective at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining American Mutual and New Perspective into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Mutual Fund and New Perspective Fund, you can compare the effects of market volatilities on American Mutual and New Perspective and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in American Mutual with a short position of New Perspective. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Mutual and New Perspective.
Diversification Opportunities for American Mutual and New Perspective
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and New is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund and New Perspective Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Perspective and American Mutual is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on American Mutual Fund are associated (or correlated) with New Perspective. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Perspective has no effect on the direction of American Mutual i.e., American Mutual and New Perspective go up and down completely randomly.
Pair Corralation between American Mutual and New Perspective
Assuming the 90 days horizon American Mutual is expected to generate 1.88 times less return on investment than New Perspective. But when comparing it to its historical volatility, American Mutual Fund is 1.29 times less risky than New Perspective. It trades about 0.06 of its potential returns per unit of risk. New Perspective Fund is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,580 in New Perspective Fund on August 28, 2024 and sell it today you would earn a total of 2,011 from holding New Perspective Fund or generate 43.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Mutual Fund vs. New Perspective Fund
Performance |
| Timeline |
| American Mutual |
| New Perspective |
American Mutual and New Perspective Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Mutual and New Perspective
The main advantage of trading using opposite American Mutual and New Perspective positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual position performs unexpectedly, New Perspective can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in New Perspective will offset losses from the drop in New Perspective's long position.| American Mutual vs. Small Pany Growth | American Mutual vs. Victory Integrity Small Cap | American Mutual vs. Nationwide Small Cap | American Mutual vs. Ab Small Cap |
| New Perspective vs. Virtus High Yield | New Perspective vs. Jpmorgan High Yield | New Perspective vs. Multi Manager High Yield | New Perspective vs. Msift High Yield |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |